Starbucks released a statement (‘Starbucks Announces Strategic Priorities to Accelerate Growth and Create Long-Term Shareholder Value‘) announcing a number of things, but the most relevant to us is the following:
In FY19, the company expects newer digital initiatives to contribute one to two points of comp growth in the U.S., supported by a redesigned Starbucks Rewards program that provides customers more choice around redemptions and payment, as well as expanded personalization capabilities for customers that have a digital relationship with the company.
Unfortunately that doesn’t really tell us that much and Starbucks has declined to comment further. Even though Starbucks is positioning this as an improvement my bet is that it will be a devaluation. In 2016 Starbucks moved to a rewards program where you earn stars based on how much you spend (2 stars per $1 spent), but on the redemption side a flat 125 Stars could be redeemed for a free reward. There is no cap on the free reward so users are better off redeeming rewards for high value items such as food or expensive custom coffees. I suspect Starbucks will move to a system where the redemption side will be tied in to how much the item costs. For example a Sandwich might cost 250 stars where a coffee might only cost 100 Stars.
When they talk about expanded personalization I suspect we are already seeing this with custom offers on the Hopscotch game for example. Obviously this is just speculation at this point though and it’s impossible to determine if this will be good or bad for consumers until we know the full details and even then if they move to dynamic redemptions it will probably depend on what you want to redeem rewards for.
